PNB plans to drag 250 defaulters to NCLT

Public sector lender Punjab National Bank (PNB) plans to take at least 250 defaulters to the National Company Law Tribunal (NCLT), as part of efforts to recovering dues promptly.

The bank has asked each bank circle to identify five defaulters where it can proceed with action at the NCLT to ensure they repay their dues. PNB has 76 circles across the country. This is one of the tools the bank is looking at to bring delinquent borrowers to the table.

“The cases where we do not have assets, or where the primary assets are missing and where delinquencies have happened, we are trying to go through the NCLT route. We want to be the early birds,” PNB Managing Director & Chief Executive Usha Ananthasubramanian said.

Banks have options like bilateral or consortium-based debt recast approach to the Debt Recovery Tribunal for recoveries. But, after enactment of the Insolvency and Bankruptcy Code 2016, banks are contemplating to use NCLT, which is a forum for trying cases under the code, for time bound action.

The bankruptcy code creates time-bound processes for insolvency resolution of companies and individuals. These processes will be completed within 180 days. If insolvency cannot be resolved, the assets of the borrowers may be sold to repay creditors.

Bahram Vakil, managing partner at AZB & Partners, a corporate law firm, said banks are suffering from a huge pool of stressed loans and they are working to use NCLT for prompt resolution of cases.

The cash recoveries and upgrades in the first nine months stood at Rs 14,724 crore. The bank has set a target of Rs 20,000 crore for recovery plus upgrade for the current financial year. In the aftermath of demonetisation, recoveries took a hit.

Ananthasubramanian said the bank has already recovered Rs 1,300 crore in January 2017. It will focus on this task for the rest of the current quarter.

The Delhi-based bank is looking to pare some of its investments during the next financial year. It has stakes in entities such as UTI Asset Management, PNB Housing Finance and PNB Gilts, the only listed primary dealer. The value of such strategic investments is between Rs 7,500 and Rs 8,000 crore. The divestment is expected to help in shoring up its capital base.

The PNB chief said the share price of PNB Housing has not gone below listing price after listing on the bourses and that it would not be possible to complete the sale of a part of its stake in the next 40 days. Last October, the bank had listed PNB Housing Finance. PNB held 39.08 per cent stake in housing finance company at end of December 2016.

As a part of its capital-raising plan, PNB has already announced its intent to raise Rs 1,500 crore through tier-I bonds. The timing for issuing these bonds would depend on market conditions, a senior PNB executive said.

Its capital adequacy ratio (CAR) stood at 11.62 per cent with tier-I of 8.84 per cent at end of December 2016. Its CAR was 11.25 per cent with tier-I of 8.52 per cent in December 2015.